Hainan FTP promotes institutional innovations in international commercial arbitration and aviation maintenance

On Nov. 15, Hainan Province released a new batch of six institutional innovation cases with distinctive Hainan Free Trade Port characteristics that reflect Hainan's efforts to further deepen reform comprehensively.

In recent years, Hainan has made clear strides in promoting institutional innovations that have continuously stimulated the development vitality of the Hainan Free Trade Port, especially in enhancing international competitiveness. At present, Hainan has launched 152 institutional innovation cases in 18 batches.

As the Hainan Free Trade Port continues to develop, there has been an increasing number of international commercial disputes. The "innovative introduction of an ad hoc arbitration system," one of the cases in this new batch, demonstrates that Hainan has taken the lead in adapting and innovating the specific provisions of China's current arbitration law within the regulatory framework of the Hainan Free Trade Port and introducing an internationally accepted ad hoc arbitration system.

On July 1, 2024, "Several Provisions on the Development of International Commercial Arbitration in Hainan Free Trade Port" officially took effect. According to the provisions, ad hoc arbitration is applicable for commercial disputes between enterprises that are both registered in the Hainan FTP, between Hainan enterprises and international counterparts, and between overseas companies, including those registered in China's Hong Kong, Macao, and Taiwan regions. This system is conducive to the efficient resolution of international commercial disputes and the provision of high-quality and efficient legal services for overseas investors.

On July 15, 2024, the first ad hoc arbitration case in China was heard in the Hainan Free Trade Port. At present, a number of cases have been concluded in Hainan.

In recent years, the Hainan Free Trade Port has become known as a global destination for the maintenance of international aircrafts, clearly demonstrating that Hainan has leveraged its unique policies to build the aviation maintenance industry.

In light of this achievement, Hainan issued the institutional innovation case, "a new model of zero-tariff service for aircraft maintenance". This case demonstrates innovation in the following aspects: (1) The establishment of China's first pilot supervision program for aircraft that have temporarily entered the country for maintenance; (2) The issuance of China's first zero-tariff management measures for aircraft and ships (including related parts) returning to China after temporary maintenance outside the country; (3) China's first zero-tariff declaration for aviation equipment returning to China after maintenance outside the country.

Under this model, the Hainan Free Trade Port's aviation maintenance industry has developed steadily. By the end of September 2024, Haikou Customs had handled 37 zero-tariff declarations for overseas aircraft temporarily entering China for maintenance, with a total value of 20.18 billion yuan ($2.79 billion). It also handled 452 zero-tariff declarations for aviation equipment－including aircraft engines, air separator components, and cabin air compressors－transported back to China after temporary maintenance outside the country, totaling 1.43 billion yuan in maintenance costs and resulting in 21.06 million yuan in tariff exemptions. These policies and measures have effectively reduced cash flow demands and operating costs for enterprises.